Approximately six percent of the US population owns their own business and relies on it as their primary source of income. In addition to those business owners, there are plenty of others who own their own business and use it as a way to supplement the other income that they have. From side hustles they’ve taken on to businesses they’ve started from the ground up, entrepreneurs everywhere are pursuing and fulfilling their dreams of business ownership in various ways.
There are a lot of benefits to owning a business, like calling the shots and making your own hours. Starting a business isn’t easy, though. From financial struggles—82 percent of businesses fail because of poor cash management—to staffing problems, entrepreneurs face a lot of challenges. In addition to those struggles, not all businesses are created equal, and not all types of businesses are suited for all types of people.
One of the keys to being a successful entrepreneur is finding a business that is a good fit for you. There are all sorts of different ways out there to become a business owner from buying an existing business to starting one on your own. If you’re interested in starting your own business, take a look at the different types of businesses below, their pros and cons, and the types of people they’re best suited for and consider which one might be best for you.
The drop ship process is fairly easy, making it a great business option for both entrepreneurs who want to quit their day job and those who want to start a business on the side. Drop shipping can be done from virtually anywhere and doesn’t necessarily require specific hours, making it a great option for people who want flexibility in both hours and location.
- Low startup costs.
- No need to store inventory.
- Freedom and flexibility.
- No control over fulfillment.
- Reliance on a third party.
- Limited customer service options.
While drop shipping is a type of ecommerce business, ecommerce is a more general term that covers any type of online store. You could run an ecommerce store through which you sell your own arts and crafts, spare parts for cars, clothing, or anything else you can think of. Because it’s done online, it generally can be done from anywhere as long as you have access to your inventory. Sales can be made at night as well, so it’s a great option for entrepreneurs who want flexibility on time and some flexibility on location.
- Getting started is easy.
- Large potential market.
- Easy to scale.
- Lots of competition.
- Lost personal touch.
- Risk of data/security breach.
A franchise is a great business opportunity for entrepreneurs who want to own their own business but aren’t sure about starting one from the ground up and going solo. Franchisees get most of the freedom of business ownership with the added support from the franchisor on everything from marketing materials to land purchases in some cases. Plus, franchise establishments are expected to grow by 1.9 percent.
- Proven success.
- Support and mentorship.
- Benefits from an established brand name.
- Startup costs can be high.
- Less creative control.
- Royalty payments.
Startups are what people often think of when they think of starting their own business. Although they can be very rewarding and offer entrepreneurs flexibility, good earning potential, and the control and influence they want, they also require a lot of hard work, dedication, and perseverance. Entrepreneurs with a higher tolerance for risk do better with startups than others.
- Control and influence.
- Unlimited earning potential.
- Personal growth and development.
- Higher risk of failure (approximately 90 percent of new startups ultimately fail).
- Starting a business can be costly.
- Income will not likely be steady.
Buying out a business is another business ownership option that not all entrepreneurs think of. Unlike purchasing a franchise, buying out a business gives you total control and influence over decisions, and unlike starting a brand-new company, you will have established processes and products. It can take a lot of money to buy a business, though, and sometimes things need to be restructured, so entrepreneurs with previous experience may be the best suited for a buyout.
- An established client base.
- A proven product or service.
- Existing sales and, (hopefully), profitability.
- Business price may be high.
- You have to work with what you purchase.
- The wrong changes can tank the company.
If you’re interested in business ownership, you don’t have to come up with an idea of your own to get started. While you can start your own company if you have the right idea already, other options may be better suited for you, your experience, and your price-range at this point. From drop shipping to buying an existing company, there are plenty of options to choose from that will give you the chance to own a business of your own.
What type of business do you think is best for you?